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nightlysok said...

You are quite keen, Greg, in using the government's own upward biased statistics to support "a positive economic outlook" of economic growth (GDP), lower inflation (CPI), and lower unemployment.

I prefer the Shadow Government Statistics (SGA) analysis: http://www.shadowstats.com/alternate_data

The SGS-Alternate GDP reflects the inflation-adjusted, or real, year-to-year GDP change, adjusted for distortions in government inflation usage and methodological changes that have resulted in a built-in upside bias to official reporting ; currently at -2% vs the BEA's +3%.

The CPI chart on the home page reflects an estimate of inflation for today as if it were calculated the same way it was in 1990. The CPI on the Alternate Data Series tab reflects the CPI as if it were calculated using the methodologies in place in 1980. In general terms, methodological shifts in government reporting have depressed reported inflation, moving the concept of the CPI away from being a measure of the cost of living needed to maintain a constant standard of living. SGS inflation is currently at ~10%.

The seasonally-adjusted SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994. That estimate is added to the BLS estimate of U-6 unemployment, which includes short-term discouraged workers. SGS unemployment is currently at ~22%.

The economy is much worse than the government wants you to think or know about.


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PeakTrader said...

If inflation was appropriately measured, i.e. fully adjusted, the recession that began in Dec '07 would've been averted.

The Fed was too cautious and too conservative.

Of course, something like Shadowstats is way behind the curve keeping up with and understanding a large dynamic macroeconomy.